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China’s Role for US Small Businesses

China and the United States have different economic and politic agendas which impact business relationships between the countries. However, over the years, the United States and China have continued to grow in importance to each other – despite trade tensions.

In 2006, the USA sold over $55 billion in goods to China. So, while there is negative publicity about the roughly $290 billion in imports from China, there are enormous business opportunities for USA businesses working with Chinese businesses – buying and selling to drive top line and bottom line growth.

Small Business Opportunities with China are Growing It is not only large multinational USA companies that are benefiting from their business relationships with China. The number of small and mid-size USA companies trading with China continues to grow. Over the past 15 years, small and mid-size companies that export to China have grown ten-fold to nearly 30,000 companies.

According the US Census Bureau, the US has a trade surplus in 8 out of 10 high-technology product categories. The majority of the US trade deficit with China is primarily in consumer products, such as electronic games, CD/DVD players and laptop PC’s. For many US market segments, there is relatively balanced trade with China.

Small and mid-size companies are taking advantage of growing opportunities to sell unique products to China customers as the standard of living improves in China. US companies are also driving growth by filling product gaps with China products intended for US customers. Of course, US companies also continue to source greater numbers of competitively priced components in China to improve their global competitive position.

“Many businesses assume that trading with China is limited to the fortune 500 companies”, said Darrell Wilk, President of WW BusinessNet and Senior China Consultant. “However, China can present vast opportunities in sales growth as well as improving cost competitiveness for small and medium sized businesses.”

“There are professional Chinese supply chain management organizations that are anxious to partner with US small and medium sized companies interested in taking advantage of opportunities in China”, according to John Gotthardt, Purchasing Manager of Ace Label Systems in Golden Valley, Minnesota. “These China sourcing organizations can assist with identification of Chinese sources, conducting vendor audits, and negotiating supplier agreements.”

Business and Political Complex Agendas Trying to improve business conditions between China and the USA through political trade barriers could negatively impact the standard of living in each country by potentially reducing trade between the countries, raising consumer prices, driving up interest rates, and slowing the economic growth of both countries. Pitting the largest global economy in a trade war with the world’s fastest growing economy is risky business in deed for the entire world economy.

Just in the USA, small and mid-size business that rely on China as a source of supply and/or a market for their products could be forced to rethink their supply chain strategy and business development plans that are critical to their business performance goals.

China Partners Support US Small Businesses Local Chinese business consulting and marketing organizations are well suited to assist small US businesses to develop their China business plan and to reach targeted Chinese markets. These Chinese support businesses are expanding rapidly in China to meet the demand from US companies. US firms have access to local Chinese business partners with experience in virtually all Chinese market segments.

For small US firms planning to do business in China, having a professional local Chinese partner can be critical to success. Local business partners would typically be available to assist USA firms successfully expand their presence in China – by answering questions, such as:

  • How can local Chinese marketing & manufacturing partners be identified and qualified?
  • What investment options might be considered in China since it is now in the WTO?
  • What types of governmental legal, financial and taxation regulations must be managed to do business in China?

Penetrating China Markets

Chinese markets afford tremendous opportunities for USA businesses. Local China partners can guide US firms by assisting in;

  • Identifying Business Opportunities
  • Finding Strategic Trading Partners
  • Working with Local Authorities
  • Assisting with Business Development

Manufacturing in China

US companies interested in expanding their manufacturing presence in China to improve their cost competitiveness could partner with local Chinese organization with expertise in planning and execution of manufacturing operations in China. Specifically, firms should consider:

  • Facility Planning
  • Geographic Location
  • Legal and Tax Issues
  • Supply China Considerations
  • Risk Mitigation Actions
  • Implementation Planning

Sourcing in China

China business partners are available to assist US firms understand the Chinese supply chain opportunities and challenges in China and can improve the probability of success by:

  • Finding Professional Sourcing Partners & Suppliers
  • Helping with Taxes and Legal Documentation Issues
  • Assisting in Supplier Management and Audits
  • Providing Logistics Import/Export Support

Today, small US businesses are competing in global market environment – almost regardless of their product market focus. Considering the positive and negative impact of China their business strategy can critical to sustain long term success, whether it is China’s rapidly growing markets or China’s highly competitive manufacturing and sourcing opportunities.

“A well thought out China strategy should be a strong consideration for small businesses”, said Darrell Wilk. “It could make the difference in the growth and prosperity of your company.”

Business Plans – Why They’re Good For You

As an entrepreneur with a creative flair for new ideas, writing a business plan is likely to feel completely alien to you – dull and far removed from the reality of actually running a business. Well, here’s the thing, a business plan is as much for YOU as it is for the audience you are presenting it to. Writing a business plan will provide clarity and vision to help you achieve your goals.

It will ensure you’ve actually thought about every aspect of you’ve your business; your competitors, target audience, distribution, marketing and other fundamentals that could help or hinder your success. You could consider writing two business plans, one with a formal tone and one with a more passionate feel to it (the latter being specifically for you). Either way, remember the real goal of a business plan is to demonstrate you are an entrepreneur fully equipped to take on the world with your business, you’re more than a dreamer you’re a doer.

A business plan is a statement of intent; of your goals and missions, of the competition and industry you are entering, of your business strategy. The style and format of your business plan should be tailored to the audience you are writing it for. If you are going to a bank for funding, then you should stick to a formal business plan (summarized at the end of this article for you). If you’re pitching to a business angel, you may wish to adopt a slightly different approach. Angels want to hear and see passion from you about your idea/business proposal, so you should think about how you could incorporate this into your business plan and make it a true reflection of you and your goals.

Remember, a successful business on paper doesn’t necessarily translate into a successful business in real life, so don’t worry too much about producing the perfect business plan. The key elements to include are:-

1. A full financial model

2. A marketing plan; including strategy, competition and product positioning

3. People management (including you)

4. A 2-5 year projection for the business

Whoever you are pitching to for funding, you should be able to demonstrate a complete knowledge of the industry you are looking at entering, including competition, target market, challenges etc. Knowledge is power and if you can competently and confidently talk about your business with real passion and enthusiasm, you’ll win the investors over every time. If you panic, flounder and are unable to answer numerous (all brought on by lack of insight and preparation) questions pitched to you, well I’m sure you can deduce the outcome. The real purpose of a business plan is to demonstrate to investors that you’ve actually thought about your business, you have a clear vision and you know the challenges and possibilities.

A formal business plan should include the following:-

1. An Executive Summary

a. This is a summary of your business plan, highlighting the key points of interest and value. It should be concise but not superficial. It needs to grab the readers attention, so needs to be interesting – think in marketing terms ‘AIDA’, Attention, Interest, Desire, Action. The aim is to get the investor to go through all of these states, resulting in the desire to invest in you.

2. Company Overview and Strategy

a. This should include the objectives, mission and feasibility of your company

b. The Price – detail what you plan to sell your product/service for and why you have decided on the price point outlined.

c. The Product – define your product and why you think there will be demand for it; include how you are going to develop it. What are the USPs? (Unique Selling Points)

d. Place – state your distribution plans; how are you going to sell your product?

e. Promotion – how are you going to promote your business? Think about your communications plan in terms of advertising, direct mail, merchandising, brand awareness

3. Competition

a. This should be as detailed and up-to-date as possible – their products, customers, distribution, service, known strategies.

4. The Market

a. What is the size of the market you are looking at entering, trends, influences, threats?

5. Customers

a. What is the target audience? Where do they live? What do they do? How old are they? Male/Female bias?

6. Managerial

a. Include yourself in this part.
b. Detail other members of your team, their skill set and the value they bring to the business (experience is of great value)
c. Training required?

7. Financial Projections

a. Include forecasts, cash flow and funding.

Remember nothing is set in stone; there is no perfect template. But, if you know your market, product, finances and competition and have oodles of passion and enthusiasm, you’ll stand out as a professional rather than an amateur.